Six Ways To Identify The Best Real Estate Investment Markets

Where are America’s best real estate markets for investing?

US News suggests real estate investors watch these six indicators when evaluating housing markets for investment.

Real estate investing comes down to simple Economics 101 concepts: supply and demand. Whether you’re planning to buy and flip a property or hold a long-term rental, there must be a healthy demand for the finished product. – US News

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The Top 6 Ways To Identify The Best Real Estate Investment Markets

1.Building Permits

Even novice property investors know that a big surge in new housing stock can affect the market. US News suggests looking even further ahead by watching building permits. See how many new buildings and homes are being approved to be built over the next few years.

2. Economic Diversification

We all know what happened to Detroit when the auto industry crashed. Having a diverse economy, with several strong industries can really help maintain sustainability over the long term.

3. Net Migration

Migration shifts the demand for real estate, and in turn occupancy rates and property prices. Some areas are bleeding population, while others are gaining it. U-Haul has a great tracking tool that shows where people are moving.

4. Days On Market

DOM shows how long it takes local property listings to sell on average. While they have recently been pretty low, there may be some pockets where days on market are very long.

5. Rental Saturation

What percentage of local properties are rentals? The US housing market has been experiencing record low rates of homeownership. Markets saturated with rentals can mean a lot of competition for landlords, or may suggest it is difficult to find buyers in that area.

6. Age of Housing Stock

US News suggests that markets like Los Angeles where the bulk of housing is decades old can offer more opportunity for those looking to rehab properties. If everything is new in an area only price appreciation, a natural disaster, or speculation is really going to add a lift. However, it is also important to look at the quality of construction. In some countries properties, have survived hundreds of years because they were built well. In others, not much seems to be lasting more than 30 or so years before it degrades and is better suited to being completely replaced.

When you are considering a new market for investments, tap into the Connected Investors network of real estate investors nationwide. Connect with investors in the area and look for investment properties anywhere in the country.